KeyBanc Capital Markets has downgraded Cirrus Logic from Overweight to Sector Weight following a recent research trip to Asia, indicating potential challenges for the company’s growth. Analyst John Vinh highlighted that approximately 80% of Cirrus Logic’s revenue is tied to Apple, which has reportedly reduced wafer starts at TSMC by the equivalent of 15 million to 20 million iPhones.
In Vinh’s note to clients, he emphasized that ongoing demand in data centers and artificial intelligence is contributing to persistent memory shortages and increasing prices. He forecasts that prices for DRAM will rise by 15% to 20% in the fourth quarter, with NAND prices projected to increase by 20%. Moreover, high-bandwidth memory prices could see a significant hike of 80% to 100% in the first quarter of 2027.
As memory suppliers shift their capacity focus toward data centers, Vinh mentioned that this could lead to a 20% to 30% reduction in bit supply for PCs and smartphones next year. Notably, companies like HP and Dell are extending their supply agreements into 2031, while Google is exploring deals that may last until 2035, reflecting a more durable market cycle.
In the analog sector, the outlook appears more favorable, supported by robust demand in industrial and data center markets. Vinh noted that lead times for some analog products have extended to around 26 weeks, with some taking up to a year.
KeyBanc’s analysis suggests a brighter future for companies such as Micron, with estimated increases for other analog players including Analog Devices, Microchip, Texas Instruments, and NXP. However, Vinh cautioned that any emerging opportunities for Cirrus Logic to diversify into the PC market may be delayed due to the high prices of memory components, limiting the company’s growth prospects in the upcoming 6 to 12 months.
